Panama is a smart choice for retirees who want it all—in a country that really wants them. Not only does it feature attractive retirement destinations—sleek capital city, hot beach towns, cool mountain villages—but it also offers an unbeatable package of retiree benefits and discounts (and a currency tied to the U.S. dollar). Little wonder there has been a steady influx of expats in the past few years.

Many retirees have settled in Panama City, a fast-paced financial hub with a Latin/Miami vibe. Others have gravitated to the Pacific Coast towns west of Coronado and the Panamanian version of Key West, hip and laid-back Bocas del Toro on the Caribbean Coast. But if you want a temperate highlands retreat surrounded by unmatched natural splendor, the mountain town of Boquete, an hour’s flight from Panama City, is close to heaven. Here expats settle amid rain forests, coffee plantations, burbling streams, and hummingbirds hovering over dazzling flowers.

Boquete is decidedly gringo-friendly, offering a wide range of back-home amenities, from a golf course to high-end gated communities. For some expats it also offers an opportunity for reinvention. Retired teachers Rich Lipner, 65, and his wife, Dee Harris, 61, moved from Berkeley, California, to Boquete, where in 2003 they bought a seven-acre organic coffee farm for $135,000. "Over the past seven years we’ve spent approximately $80,000 to build a new 1,000-square-foot guest house and restore the original 2,000-square-foot house," Lipner says. "We’re living comfortably on our combined Social Security and teachers' retirement. We’ve begun a new and wondrous chapter in our lives."

Oh, about those discounts and benefits we mentioned earlier? They include 20 to 50 percent discounts on air, bus, and train fares, movies, concerts, restaurants, hospital bills, medical consultations, and more. (One older gentleman in Boquete living on Social Security proudly announced he got a 50-cent discount on a McDonald’s hamburger.) As Ruben Blades, the international salsa singer who also served a term as Panama's minister of tourism, once said: "People don’t come to Panama to die. They come here to live."

What to Expect inBoquete

Climate

Temperate with two distinct seasons, wet (April to November) and dry (December to March). Much cooler than the lowlands and beaches.

Expat Community

An estimated several thousand.

Cost of Living

One can live comfortably on $20,000 a year. Domestic and garden help: about $15 daily. Dinner out: $30 for two.

Housing Costs

In Boquete, a small house goes for $175,000; in a gated community, $250,000 and up. Rentals: about $600 a month for a two-bedroom house.

Health Care

Good, with private clinics available. For serious medical matters, residents travel to hospitals in David, 45 minutes away, or to Panama City. Hospital Punta Pacifica in Panama City is affiliated with Johns Hopkins Medicine International and has U.S- trained doctors.